i IN THE SUPREME COURT OF IOWA Case No. 16-1462 MARK GRIFFIOEN, et al., Plaintiff-Appellants v. CEDAR RAPIDS and IOWA CITY, et al. Defendants-Appellee’s Appeal from Judgment in the Iowa District Court for Linn County Case No. LACV078694 APPELLANT’S FINAL BRIEF Sam Sheronick, SAM SHERONICK LAW FIRM, P.C. 4125 Glass Road NE Cedar Rapids, Iowa 52402 Telephone:(319) 366-8193 Email: [email protected]C. Brooks Cutter, Pro Hac Vice John R. Parker, Jr., Pro Hac Vice CUTTER LAW P.C. 401 Watt Avenue Sacramento, CA 95864 Telephone:(916)290-9400 Email: [email protected][email protected]ELECTRONICALLY FILED FEB 15, 2017 CLERK OF SUPREME COURT
Transcript
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IN THE SUPREME COURT OF IOWA
Case No. 16-1462
MARK GRIFFIOEN, et al.,Plaintiff-Appellants
v.
CEDAR RAPIDS and IOWA CITY, et al.Defendants-Appellee’s
Appeal from Judgment in the Iowa District Court for Linn CountyCase No. LACV078694
APPELLANT’S FINAL BRIEF
Sam Sheronick,SAM SHERONICK LAW FIRM, P.C.4125 Glass Road NECedar Rapids, Iowa 52402Telephone:(319) 366-8193Email: [email protected]
C. Brooks Cutter, Pro Hac ViceJohn R. Parker, Jr., Pro Hac ViceCUTTER LAW P.C.401 Watt AvenueSacramento, CA 95864Telephone:(916)290-9400Email: [email protected]
Russell G. Petti, Pro Hac ViceLAW OFFICES OF RUSSELL G. PETTI466 Foothill Blvd., # 389La Canada, CA 91011Telephone:(818) 952-2168Email: [email protected]
Edward A. Wallace, Pro Hac ViceAmy E. Keller, Pro Hac ViceWEXLER WALLACE LLP55 W. Monroe St., Suite 3300 Chicago,IL 60603Telephone:(312) 346-2222Email: [email protected]
Eric J. Ratinoff, Pro Hac ViceERIC RATINOFF LAW CORP.401 Watt AvenueSacramento, CA 95864Telephone: (916)473-1529Email: [email protected]
Counsels for Plaintiff-Appellants
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PROOF OF SERVICE
On February 15, 2017, I, the undersigned, do hereby certify that I or
someone acting on my behalf did serve the Appellees Final Brief and Request for
Oral Argument electronically on all respective parties.
/s/ Amy E. KellerAmy E. Keller
CERTIFICATE OF SERVICE
On February 15, 2017, I, the undersigned, do hereby certify that I or
someone acting on my behalf did electronically file the Appellees Final Brief and
Request for Oral Argument electronically on all respective parties.
/s/ Amy E. KellerAmy E. Keller
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TABLE OF CONTENTS
I. INTRODUCTION AND SUMMARY OF ARGUMENT...................................1
II. STATEMENTS OF APPEAL..............................................................................7
III. ROUTING STATEMENT: This Case Should Be Retained by the IowaSupreme Court ...........................................................................................................8
IV. STATEMENT OF FACTS, STATEMENT OF THE CASE, AND THEDISTRICT COURT’S DECISION............................................................................9
A. Statement of Facts as Pleaded in the CAP.................................................9
B. Statement of the Case...............................................................................10
C. The District Court’s Decision was Flawed on Numerous Grounds ........12
V. ARGUMENT ......................................................................................................14
A. The Court should analyze the trial court’s flawed preemption analysisunder the correction of error standard, and the issue was preserved forappeal. ............................................................................................................14
B. The ICCTA does not preempt state laws of general application with anincidental effect on rail transportation. .........................................................14
1. Defendants must overcome the presumption that state law is notpreempted, and bear the burden of proof to show that the Plaintiffs’claims are preempted by the ICCTA ..................................................14
2. The ICCTA’s statutory language, as generally interpreted, limitspreemption to direct attempts by states to regulate rail transportation. 16
a) The ICCTA’s actual preemption provision is narrow, limitedto state law remedies that conflict with those provided by thestatute. .................................................................................16
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b) The ICCTA preempts state laws that directly regulate railoperations while preserving state laws of general applicationwith an incidental impact on rail transportation. ................18
c) The District Court erred when it rejected the widelyaccepted test for ICCTA preemption, in favor of a minoritytest. ......................................................................................24
d) Consistent with the established test, Elam points out thedistinction between direct and incidental regulation of railtransportation. ......................................................................25
e) Consistent with the established test, most courts haveconstrued ICCTA preemption narrowly, to reach only stateattempts to directly regulate rail transportation. .................28
3. Analysis of other preemption statutes shows that congressionalimposition of a uniform regulatory scheme does not—without more—extinguish garden-variety tort claims against the regulated entity. ....36
4. While it is possible for Congress to eliminate all state tort remediesagainst an industry without creating a substitute remedy, this isextremely rare and the ICCTA was not intended to accomplish this. 39
a) The language and Legislative History of the ICCTA showsCongress intended the scope of its preemption to be narrowand focused on state economic regulation of railtransportation. .....................................................................39
b) While it is theoretically possible for Congress to extinguishstate tort remedies without providing a federal remedy, nointent to do so is shown here................................................42
C. The Plaintiffs’ claims involve rail safety rather than economic issues, andas such preemption should be examined under the FRSA rather than theICCTA.. ........................................................................................................45
1. The standard of review is for correction of error, and the issue waspreserved for appeal. ...........................................................................45
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2. Under the FRSA, state law claims addressing railroad safety issuesare not preempted. ..............................................................................45
3. Claims involving rail safety, like the Plaintiffs’, are governed by theFRSA rather than the ICCTA. ............................................................46
D. The District Court erred by dismissing the Plaintiff Class’ claims on thepleadings, without a factual showing by Defendants that the state laws atissue actually burdened rail transportation. ...................................................49
1. The standard of review is for correction of error, and the issue waspreserved for appeal. ......................................................................49
2. The District Court erred in Finding Plaintiffs’ claims burdened railtransportation, in the absence of facts establishing such a burden.. ......................................................................................................50
E. The District Court erred in holding that Iowa law requiring rail bridges tobe kept in good repair was preempted by the ICCTA.. .................................52
1. The standard of review is for correction of error, and the issue waspreserved for appeal. ......................................................................52
2. In Washington County the Eighth Circuit held that the very statuteunder which Plaintiffs are proceeding, requiring railroads to keeprail bridges in good repair, was not preempted by the ICCTA.. .......................................................................................................52
VI. CONCLUSION.................................................................................................57
VII. REQUEST FOR ORAL ARGUMENT...........................................................57
CERTIFICATE OF COMPLIANCE.......................................................................57
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TABLE OF AUTHORITIES
Cases
A&W Properties, Inc. v. Kansas City Southern Ry. Co.,200 S.W.3d 342 (Tex. App. 2006)..........................................................13, 24, 25
Adrian & Blissfield R. Co. v. Vill. of Blissfield,550 F.3d 533 (6th Cir. 2008) ..................................................................23, 33, 34
Altria Grp., Inc. v. Good,555 U.S. 70 (2008)..............................................................................................15
Anderson v. Union Pacific R. Co.,No. 10-193-DLD, 2011 WL 4352254 (M.D. La. Sept. 16, 2011)................32, 33
Ass’n of Am. Railroads v. S. Coast Air Quality Mgmt. Dist.,622 F.3d 1094 (9th Cir. 2010) ............................................................................23
Bates v. Dow Agrosciences LLC,544 U.S. 431 (2005)..................................................................................7, 36, 37
Battley v. Great W. Cas. Ins. Co.,No. 14-494-JJB, 2015 WL 1258147 (M.D. La. Jan. 12, 2015)....................31, 32
Chicago & Eastern R.R. Corp. v. Washington County, Iowa,384 F.3d 557 (8th Cir. 2004) .......................................................................passim
CSX Transp., Inc. v. Georgia Pub. Serv. Comm’n,944 F.Supp. 1573 (N.D.Ga.1996).......................................................................24
Elam v. Kansas City S. Ry. Co.,635 F.3d 796 (5th Cir. 2011) .......................................................................passim
Emerson v. Kansas City Southern Ry. Co.,503 F.3d 1126 (10th Cir. 2007) ..............................................................28, 29, 35
Florida E. Coast Ry. Co. v. City of W. Palm Beach,266 F.3d 1324 (11th Cir. 2001) ...................................................................passim
Franks Inv. Co. LLC v. Union Pac. R. Co.,593 F.3d 404 (5th Cir. 2010) .......................................................................passim
Girard v. Youngstown Belt Ry. Co.,134 Ohio St. 3d 79, 979 N.E.2d 1273 (2012).........................................23, 34, 41
Griffioen v. Cedar Rapids & Iowa City Ry. Co.,785 F.3d 1182 (8th Cir. 2015) ......................................................................12, 43
Guild v. Kansas City S. Ry. Co.,541 F. App’x 362 (5th Cir. 2013) ...........................................................29, 30, 35
Johnson v. MFA Petroleum Co.,701 F.3d 243 (8th Cir. 2012) ..............................................................................11
King v. Marriott Intern. Inc.,337 F.3d 421 (4th Cir. 2003) ..............................................................................11
Lundeen v. Canadian Pacific R. Co.532 F.3d 682 (8th Cir. 2008) ..............................................................................10
McBurney v. Young,133 S. Ct. 1709, 185 L. Ed. 2d 758 (2013).........................................................24
Medtronic, Inc. v. Lohr,518 U.S. 470 (1996)............................................................................................39
New Orleans & Gulf Coast Ry. Co. v. Barrois,533 F.3d 321 (5th Cir. 2008) ........................................................................29, 35
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New York Susquehanna and Western Ry. Corp. v. Jackson,500 F.3d 238 (3d Cir. 2007) ...............................................................................23
Orud v. Groth,652 N.W.2d 447 (Iowa, 2002) ........................................................................8, 16
PCS Phosphate Co., Inc. v. Norfolk Southern Corp.,559 F.3d 212 (4th Cir. 2009) ..............................................................................23
People v. Burlington N. Santa Fe R.R.,209 Cal. App. 4th 1513, 148 Cal. Rptr. 3d 243 (2012) ............................8, 22, 51
Rice v. Santa Fe Elevator Corp.,331 U.S. 218 (1947)............................................................................................14
Silkwood v. Kerr-McGee Corp.,464 U.S. 238 (1984)..........................................................................16, 38, 43, 44
Sleath v. W. Mont Home Health Servs., Inc.,16 P.3d 1042 (Mont. 2000).................................................................................37
Smith v. CSX Transp.,No. 13 CV 2649, 2014 WL 3732622 (N.D. Ohio 2014) ....................................48
Smith v. Smith,513 N.W.2d 728 (Iowa 1994) ......................................................................passim
Staley v. BNSF Ry. Co.,No. CV14-136-BLG-SPW, 2015 WL 860802 (D. Mont. Feb. 27,2015) .............................................................................................................31, 32
Tyrrell v. Norfolk Southern Ry. Co.,248 F.3d 517 (6th Cir. 2001) ....................................................................8, 46, 47
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In re Vermont Ry.,171 Vt. 496 (2000)........................................................................................40, 41
Wolf v. Cent. Oregon & Pac. R.R.,230 Or. App. 269, 216 P.3d 316 (2009) .............................................................34
Works v. Landstar Ranger, Inc.,No. CV 10-1383 DSF, 2011 WL 9206170 (C.D. Cal. 2011) .............................34
Eldredge, M., Who’s Driving the Train? Railroad Regulation andLocal Control, 75 U. Colo. L. Rev. 549, 587 (2004) .........................................41
In June 2008, Defendants’1 actions caused a nearly biennial, minor flood to
turn into a major catastrophic flood, destroying over ten square miles and causing
Cedar Rapids property owners to suffer over six billion dollars of property damage.
Defendants caused this damage because they sought to protect their railroad
bridges spanning the Cedar River at the expense of property owners in Cedar
Rapids. Immediately before the June 2008 flood, Defendants parked railcars
loaded with heavy rock on these bridges in an effort to keep the bridges from
washing out during what would have been a minor flood. Two of the bridges,
weighed down with Defendants’ rock-filled railcars, collapsed, creating an
artificial dam, and causing the river to rise the same exact height of the rail cars
and the second collapsed, solid-sided rail bridge. The railcars parked on the two
bridges that did not collapse also acted like a dam when the bridges were over-
topped by the rising waters, diverting additional waters over the banks of the river.
As a result, storm sewers were blocked from emptying into the river, which
1 Defendant-Appellees Union Pacific Railroad Company, Union PacificCorporation (collectively referred to as “UP”), Alliant Energy Corporation, andCedar Rapids and Iowa City Railway Company (collectively referred to as“CRANDIC”).
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exacerbated the effects of the two collapsed rail bridges. The injured Plaintiffs2
filed a Class Action Petition (“CAP”), seeking damages based on Iowa state law
claims for the property damage caused by Defendants’ negligence and
malfeasance.
Since this case was filed—over three years ago—Defendants have avoided
discovery and adjudication on the merits by asserting various preemption defenses.
First, Defendants removed the suit to federal court claiming the Federal Railroad
Safety Act (hereinafter “FRSA”) preempted state law. Then, realizing they would
not win that argument, Defendants switched their removal/preemption theory by
claiming that the Interstate Commerce Commission Termination Act (“ICCTA”)
completely preempted the Plaintiffs’ claims. Defendants took this position despite
acknowledging that the ICCTA did not supply a federal remedy, a requirement for
complete preemption (as opposed to conflict preemption, which is their current
argument). Unfortunately, the federal District Court agreed with Defendants,
dismissing the suit without leave to amend. An appeal to the Eighth Circuit Court
of Appeals followed, and the Eighth Circuit ruled that, because the ICCTA did not
supply a federal claim for relief to substitute for the Plaintiffs’ claims, there was no
complete preemption. The case was remanded to Iowa state court.
2 Plaintiff-Appellants Mark Griffioen, Joyce Ludvicek, Mike Ludvicek, SandraSkelton, and Brian Vanous and All Others Similarly Situated (hereinaftercollectively referenced as “Plaintiffs”).
3
Since arriving back to the Linn County District Court, Defendants have
concocted yet a third preemption theory, that Plaintiffs’ state law claims are
preempted because they conflict with the ICCTA (i.e. claiming conflict
preemption). In other words, Defendants argue that, even if every word of the
CAP were true and that their negligence and wrongful conduct caused immense
damage to nearly 20,000 people, Defendants are immunized by federal law from
any possible liability. But this completely misstates the applicable law of
preemption, and there is nothing in either the language of the ICCTA or its
legislative history that supports the notion that Congress intended such an
extraordinary result.
Plaintiffs respectfully submit that the District Court erred when it dismissed
this case. With conflict preemption, state laws are preempted only when they
actually conflict with or attempt to directly regulate the federally-regulated
industry in question (here, the railroad industry). However, conflict preemption
does not apply to state laws of general applicability with only an incidental effect
upon the federally-regulated industry. Here, the Plaintiffs’ claims for property
damage are founded upon generally-applicable Iowa state laws of negligence and
strict liability. Because the effect of these Iowa laws on rail transportation is only
incidental, there is no preemption.
Moreover, the ICCTA attempted to deregulate the rail industry, not to
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immunize it from tort liability—and this intent is clearly stated in the Act’s
legislative history. Similarly, the ICCTA vests certain powers in the agency it
created, the Surface Transportation Board (“STB”), and only preempts state laws
that purport to duplicate remedies created by the ICCTA. The Eighth Circuit has
already held, in this very case, that the Plaintiffs’ claims do not implicate any
remedies created by the ICCTA and are therefore not generally preempted by the
ICCTA.
Moreover, the scope of ICCTA preemption is well established, with a test
which has been adopted by every federal appeals court to examine the issue (seven
U.S. Courts of Appeal, at last count) as well as numerous state courts. This test is
simple—under the ICCTA:
1. Direct state regulation of rail transportation is preempted; but
2. State laws of general application with an incidental or remoteimpact on rail transportation are not preempted.
Under this straight-forward test, ICCTA preemption is narrowly limited to state
laws that attempt to directly regulate railroad economic functions, such as location
of rail lines, rail rates, competition, rail operations and the like. State laws of
general application—like the Iowa common law of negligence and strict liability
applicable here—are not preempted, as their impact on railroads and rail
transportation are only incidental.
Consistent with the prevailing test, many federal and state courts have
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agreed that ICCTA preemption does not apply just because the defendant is a
railroad and the subject of the suit might involve or impact rail transportation.
Instead, courts limit ICCTA preemption to a State’s attempts to directly regulate
transportation. Accordingly, under this prevailing test, the ICCTA does not
preempt the claims of plaintiffs who sue under state law to recover for property
damage or personal injury caused by a railroad’s acts or negligence. Similarly,
many courts have held that railroads are not exempt from state laws of general
application, even where the state law might have some incidental impact on rail
transportation. The general rule, for the ICCTA and all federal regulation, is that
the imposition of a federal regulatory scheme does not preempt state tort laws of
general application, barring an expressed intent by Congress specifically to
preempt garden-variety state law remedies for economic damages.
But beyond Plaintiffs’ common law claims for economic loss, Plaintiffs have
also brought safety-related claims in this lawsuit (such as claims for strict liability),
which are more appropriately analyzed under the FRSA. The FRSA is explicit that
state law claims for property damage like the ones asserted by the Plaintiffs here
are not preempted by federal law.3 And Plaintiffs’ statutory claims (brought under
3 Plaintiffs note that the City of Cedar Rapids exercised common-sense policepowers in recent high water events that occurred in 2016 to protect againstpotential flooding, where the City blocked the entrances to the rail bridges withbarriers as a precaution. If allowed to amend, Plaintiffs would include theseallegations to argue that broad exemptions from state and local regulations—the
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an Iowa statute which requires railroads be kept in good repair) are likewise not
preempted: in Chicago & Eastern R.R. Corp. v. Washington County, Iowa, 384
F.3d 557 (8th Cir. 2004), the Eighth Circuit held that this very statute was not
preempted by the ICCTA.
The District Court erred below because it did not apply the correct, majority
test for preemption. Instead, the District Court relied on a little-cited decision by a
Texas State appellate court, and expressly rejected the test for ICCTA preemption
that has been accepted by every federal circuit to consider the question. Moreover,
in addition to applying the wrong test, the District Court decided on the pleadings,
without any evidentiary proceeding that could assess the truth of Defendants’
argument, that the claims here would impermissibly burden Defendants’
obligations to comply with the ICCTA and federal regulations. The District Court
accordingly immunized Defendants’ from any possibility of liability “on faith”—
simply assuming that the Defendants’ version of the facts is correct without
actually weighing or considering any facts at all.
The Linn County District Court also principally relied on cases where the
plaintiffs had demanded that the defendant railroad operate differently or
reconstruct its track to certain specifications—actions which would have some
type of exemptions for which the railroads argue—would prevent localgovernments from preventing large-scale destruction such as that which occurredin 2008.
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impact on rail operations. However, the Plaintiffs here seek no such remedy.
Plaintiffs make no demands on how Defendants should operate in the future,
whether they should be able to park railcars on their remaining bridges (which are
now over a century old), or how they should reconstruct any destroyed bridges (or
whether they reconstruct them at all). Rather, Plaintiffs seek money damages
because past wrongful conduct has damaged their property. And the United States
Supreme Court has consistently held, in cases like Bates v. Dow Agrosciences
LLC, 544 U.S. 431, 442 (2005), discussed below, that a jury award for damages
that could have the incidental effect of altering a federally-regulated entity’s
conduct in the future does not constitute a “conflict” with federal regulation that
would require preemption.
Put simply, Plaintiffs are seeking property damages under state laws of
general application because Defendants’ actions caused that property damage.
Their case is not preempted.
II. STATEMENT OF ISSUES OF APPEAL.
1. Whether the Linn District Court erred in holding that state laws ofgeneral application with only an incidental impact on railtransportation were preempted by the ICCTA;
Authority: Florida E. Coast Ry. Co. v. City of W. Palm Beach, 266 F.3d1324, 1331 (11th Cir. 2001); Franks Inv. Co. LLC v. Union Pac. R. Co., 593F.3d 404, 407 (5th Cir. 2010); Elam v. Kansas City S. Ry. Co., 635 F.3d 796,807, 813 (5th Cir. 2011)
8
2. Whether the Linn District Court erred when it failed to consider that,because Plaintiffs’ primary concerns involved rail safety issues, thefederal preemption question should be addressed under the FRSA,which expressly holds that state claims are not preempted; and
Authority: Tyrrell v. Norfolk Southern Ry. Co., 248 F.3d 517, 522-23 (6thCir. 2001); Chicago & Eastern R.R. Corp. v. Washington County, Iowa, 384F.3d 557, 560 (8th Cir. 2004)
3. Whether the Linn District Court erred in dismissing the Plaintiffs’claims on the pleadings, without a showing by Defendants that theclaims actually had an impact on rail transportation;
Authority: Orud v. Groth, 652 N.W.2d 447, 450-511 (Iowa, 2002); Elam v.Kansas City S. Ry. Co., 635 F.3d 796, 813 (5th Cir. 2011); People v.Burlington N. Santa Fe R.R., 209 Cal. App. 4th 1513, 1528, 148 Cal. Rptr.3d 243, 254 (2012)
4. Whether the Linn District Court erred in finding that Iowa Code §327F.2 is preempted by the ICCTA, a determination directly contraryto the Eighth Circuit’s Washington County Case.
Authority: Chicago & Eastern R.R. Corp. v. Washington County, Iowa, 384F.3d 557, 560 (8th Cir. 2004)
III. ROUTING STATEMENT: THIS CASE SHOULD BE RETAINED BYTHE IOWA SUPREME COURT.
The factors set out in Iowa R. App. Proc. 6.1101 mitigate in favor of the
Iowa Supreme Court retaining this case:
1. This case involves a substantial question as to the validity of a statute;
2. The issue of whether Iowa law is preempted by the ICCTA is an issue
of first impression in the Iowa courts; and
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3. The case involves an issue of broad public importance, which is
whether the Plaintiffs (and the nearly 20,000 property owners they
hope to represent) in Cedar Rapids will be compensated for damages
allegedly caused by Defendants during the 2008 Cedar Rapids flood.
IV. STATEMENT OF FACTS, STATEMENT OF THE CASE, AND THEDISTRICT COURT’S DECISION.
A. Statement of facts as pleaded in the CAP.
The Plaintiffs and putative class members all own property in Cedar Rapids,
Iowa, which was damaged when the Cedar River flooded in June of 2008 (June 7,
2013 Class Action Petition (App. 4-5). Prior to the June 2008 flood, Defendants
parked railcars loaded with rock on dilapidated, over-century-old bridges they
owned which spanned the Cedar River in an effort to save the bridges from being
washed out. (App. 7-8). Because the bridges were weighed down with heavy,
rock-filled railcars, some of them collapsed, effectively damming the river. (App.
9). The railcars on the bridges that did not collapse also caused damage: when the
bridges were overtopped by the river water, they acted like a dam, diverting
enormous amounts of water into low-lying areas rather than letting the water flow
through the “skeletal” bridges and down the river. (App. 8). All of these actions
by Defendants combined to cause—or at least substantially exacerbate—the 2008
Flood. (App 9).
10
The Plaintiffs filed the CAP to recover damage caused to their property
based upon strict liability law for Defendants’ negligence (App. 23), engagement
in abnormally dangerous activity (App. 16-18), and for violations of Iowa Code §
468.148 (App. 19), which imposes liability under state law upon persons who
cause damage through obstruction of the free flow of waters, and Iowa Code §
327F.2, which requires that railroads, among other things, maintain, and keep in
good repair all bridges (App. 21-22).
B. Statement of the case.
The June 7, 2013 CAP alleged only state law claims against Defendants. On
July 2, 2013 the Union Pacific Defendants filed a Notice of Removal contending
that the Plaintiffs’ claims were completely preempted by Federal law. (App. 104-
209). This Notice made no mention of the ICCTA, rather, UP contended that the
Plaintiffs’ state law claims were preempted by an entirely different body of law,
the Federal Railroad Safety Act (“FRSA”) (49 U.S.C. § 20101 et seq.). (App. 109-
111).
Shortly thereafter, Plaintiffs filed a Motion to Remand for improper removal
and lack of subject matter jurisdiction noting that in Lundeen v. Canadian Pacific
R. Co. 532 F.3d 682, 688 (8th Cir. 2008), the Eighth Circuit held that the 2007
“clarifying amendment” to the FRSA’s preemption provision (49 U.S.C. § 20106)
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expressly stated that the FRSA did not preempt state law claims such as those
brought by the Plaintiffs.
In response, Defendants abandoned the argument that the FRSA completely
preempted the Plaintiffs’ claims. Instead, Defendants argued for the first time that
it was the ICCTA which formed the basis for removal. (App. 216). But this new
argument was also wrong. The ICCTA provides no remedy for a property owner
damaged by a railroad’s negligent use of its property, and numerous decisions by
the United States Supreme Court and various federal circuit courts of appeal have
uniformly held that complete preemption giving rise to federal jurisdiction can only
exist where the federal scheme supplies an alternative cause of action.4
Defendants failed to identify a federal scheme replacing the state laws which it
contended were subject to federal preemption, and to the contrary, UP explicitly
stated that the Plaintiffs could assert no possible claim against it. (App. 213).
The federal district court accepted Defendants’ flawed argument, agreeing
that there was complete preemption even though no alternative cause of action
4 E.g. King v. Marriott Intern. Inc., 337 F.3d 421, 425 (4th Cir. 2003) (“Thus, avital feature of complete preemption is the existence of a federal cause of actionthat replaces the preempted state cause of action.”); Rogers v. Tyson Foods, Inc.,308 F.3d 785, 788 (7th Cir. 2002) (“Logically, complete preemption would not beappropriate if a federal remedy did not exist in the alternative.”); Johnson v. MFAPetroleum Co., 701 F.3d 243, 252 (8th Cir. 2012) (“We conclude that without afederal cause of action which in effect replaces a state law claim, there is anexceptionally strong presumption against complete preemption.”).
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existed. Plaintiffs were compelled to appeal the court’s decision to the Eighth
Circuit. Not surprisingly, given the clarity of the law on this point, the Eighth
Circuit agreed with the Plaintiffs holding complete preemption cannot exist
without a federal cause of action:
The scope of complete preemption turns primarily on the provisioncreating the federal cause of action—not on an express preemptionprovision. It is the federal cause of action that ultimately supplants thestate-law cause of action and effectuates complete preemption.
Griffioen v. Cedar Rapids & Iowa City Ry. Co., 785 F.3d 1182, 1190 (8th Cir.
2015).
Upon remand to the Linn County District Court, Defendants advanced the
equally-flawed argument that Congress essentially immunized railroads from state
law tort and statutory liability when it enacted the ICCTA, while further
contending that Congress intended victims of railroad negligence to have no
remedies at all. Unfortunately, the Linn County District Court accepted this new
argument, dismissing the Plaintiffs’ claims on the pleadings, without leave to
amend. The District Court’s decision is in error.
C. The District Court’s decision was flawed on numerous grounds.
The District Court made three fundamental errors when it determined that
the ICCTA preempted Plaintiffs’ claims. Initially, the District Court failed to
follow the test for ICCTA preemption generally accepted by the courts, which is
that ICCTA preemption is “narrow,” and preempts state attempts to directly
13
regulate rail transportation, but not state laws of general application which have
only an incidental or remote impact on rail transportation. Instead, citing to cases
such as A&W Properties, Inc. v. Kansas City Southern Ry. Co., 200 S.W.3d 342
(Tex. App. 2006), the District Court followed a minority view, holding that state
law claims are preempted by the ICCTA if the remedies they seek would have any
impact at all on rail transportation. (App. 338).
Second, even using this erroneous standard, the District Court should not
have decided this case on the pleadings. Whether a state law burdens rail
transportation is—for the most part—a fact-based inquiry, yet at the pleading
stage, Defendants had not presented a single fact showing that the relief sought by
the Plaintiffs (monetary compensation for damages caused by Defendants’
negligence) would have any impact at all on rail transportation.
Third, one of the Plaintiffs’ claims is based on Iowa Code section 327F.2,
which requires railroads to keep rail bridges in good repair. In Chicago & Eastern
R.R. Corp. v. Washington County, Iowa, the Eighth Circuit held section 327F.2,
this precise statute, which creates a state law cause of action for negligence arising
out the maintenance of railroad bridges, was not preempted by the ICCTA, in spite
of the fact that it constituted direct regulation of rail transportation. 384 F.3d 557,
561 (8th Cir. 2004). In finding that Washington County was not controlling here,
the District Court misread that decision and improperly narrowed it to its facts.
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V. ARGUMENT.
A. The Court should analyze the trial court’s flawed preemptionanalysis under the correction of error standard, and the issue waspreserved for appeal.
Given that Plaintiffs appeal the District Court’s grant of Defendants’ Motion
to Dismiss on the pleadings, review here is for correction of error. Under this
standard, the District Court’s decision should be upheld “only if we can conclude
that no state of facts is conceivable under which a plaintiff might show a right of
recovery.” Smith v. Smith, 513 N.W.2d 728, 730 (Iowa 1994).
The issue of the proper construction of the ICCTA’s preemption provision
was raised at the District Court and therefore was preserved for appeal. (E.g. App.
70-84).
B. The ICCTA does not preempt state laws of general applicationwith an incidental effect on rail transportation.
1. Defendants must overcome the presumption that state lawis not preempted, and bear the burden of proof to show thatthe Plaintiffs’ claims are preempted by the ICCTA.
In conducting its preemption analysis, this Court should “start with the
assumption that the historic police powers of the States were not to be superseded
by the Federal Act unless that was the clear and manifest purpose of Congress.”
Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947). The United States
Supreme Court has held that “when the text of a pre-emption clause is susceptible
of more than one plausible reading, courts ordinarily accept the reading that
15
disfavors pre-emption.” Altria Grp., Inc. v. Good, 555 U.S. 70, 77 (2008)
(attribution omitted). In determining whether the ICCTA preempts state laws of
general application,
[w]here the State acts in a field which the States have traditionallyoccupied, however, we retain the assumption that the historic policepowers of the States were not to be superseded by the Federal Actunless that was the clear and manifest purpose of Congress.Principles of federalism, including the recognition that the States areindependent sovereigns in our federal system, dictate that in theabsence of such clarity of intent, Congress cannot be deemed to havesignificantly changed the federal-state balance.
Florida E. Coast Ry. Co. v. City of W. Palm Beach, 266 F.3d 1324, 1328 (11th Cir.
2001) (citations and attributions omitted, emphasis added). Therefore, “if the
statute's terms can be read sensibly not to have a pre-emptive effect, the
presumption controls and no pre-emption may be inferred.” Fla E. Coast R., 266
F.3d at 1328. This presumption against pre-emption “is relevant even when there
is an express pre-emption clause.” Franks Inv. Co. LLC v. Union Pac. R. Co., 593
F.3d 404, 407 (5th Cir. 2010).
Here, Plaintiffs sued Defendants under Iowa common law negligence
principles of general application, strict liability, and the long-standing Iowa law
requiring that bridges be maintained in good repair. These are traditional areas of
state regulation and the Court should presume they are not preempted unless
Defendants overcome this presumption with specific facts.
In order to overcome this presumption, Defendants bear the burden of proof
16
in showing that application of state law to their activities is subject to preemption
by the ICCTA:
As we noted above, Congress assumed that traditional principles ofstate tort law would apply with full force unless they were expresslysupplanted. Thus, it is Kerr-McGee’s burden to show that Congressintended to preclude such awards.
Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255 (1984). Also, Access Mediquip
preemption is an affirmative defense which must be proven by the defendant at
trial.”).
In other words, in order to successfully contend that the Plaintiffs’ claims are
preempted, Defendants must present actual facts showing that allowing the claims
to proceed will be a real burden on their rail operations. Of course, this is
impossible on a motion to dismiss on the pleadings, which is why the District
Court erred in granting it. See Orud v. Groth, 652 N.W.2d 447 (Iowa, 2002);
LaMarca, George A., 1 Iowa Pleading and Causes of Action 449-451 (1994).
2. The ICCTA’s statutory language, as generally interpreted,limits preemption to direct attempts by states to regulaterail transportation.
a) The ICCTA’s actual preemption provision is narrow,limited to state law remedies that conflict with thoseprovided by the statute.
The District Court erred in adopting Defendants’ vision of the ICCTA,
where all state law suits against railroads are preempted if they have an impact on
17
rail transportation. Plaintiffs submit this is wrong; some state laws that impact rail
transportation are preempted, and some are not, and the key issue is discovering
the line between what is preempted and what is not. As noted by the First Circuit
in Fayard v. Northeast Vehicle Services, LLC, 533 F.3d 42 (1st Cir. 2008):
But even where a federal statute can completely preempt some statelaw claims, the question remains which claims are so preempted. Noone supposes that a railroad sued under state law for unpaid bills by asupplier of diesel fuel or ticket forms can remove the case based oncomplete preemption simply because the railroad is subject to theICCTA.
Fayard, 533 F.3d at 47 (holding that state law nuisance claims against railroad
were not preempted by the ICCTA).
The question of what ICCTA preempts, and what it does not, begins with the
statute itself. “In determining the existence and reach of preemption, Congress’
purpose is ‘the ultimate touchstone’ to use. Franks Inv. Co. LLC v. Union Pac. R.
Co., 593 F.3d 404, 407 (5th Cir. 2010) (en banc). Here, the ICCTA’s preemption
language reads as follows:
(b) The jurisdiction of the Board over--
(1) transportation by rail carriers, and the remedies provided in thispart with respect to rates, classifications, rules (including car service,interchange, and other operating rules), practices, routes, services, andfacilities of such carriers; and
(2) the construction, acquisition, operation, abandonment, ordiscontinuance of spur, industrial, team, switching, or side tracks, orfacilities, even if the tracks are located, or intended to be located,entirely in one State, is exclusive. Except as otherwise provided in thispart, the remedies provided under this part with respect to regulation
18
of rail transportation are exclusive and preempt the remedies providedunder Federal or State law.
49 U.S.C. § 10501(b) (emphasis added).
There are two sentences here, the first grants jurisdiction to the STB, and the
actual preemption language is in the last sentence of 49 U.S.C. § 10501(b)(2). The
preemption language itself is narrow; it does not, for example, expressly preempt
“any and all State laws insofar as they may now or hereafter relate to any employee
benefit plan,” as ERISA does. 29 U.S.C. § 1144(a). Rather, the actual preemption
language here only preempts remedies duplicative of those provided by the
ICCTA, stating that “the remedies provided under this part are exclusive.”
In reading this statute the District Court, at UP’s urging, focused on the first
section of the ICCTA preemption statute, noting that “[i]t also grants the STB
exclusive jurisdiction, using language that is even more powerful than that found in
other jurisdictions that the Supreme Court has held support complete preemption.”
(App. 335). As shown below, in putting its focus on the STB’s grant of
jurisdiction rather than the actual preemption provision, the District Court both
erred in understanding the language and departed from the numerous federal courts
that have interpreted this statute.
b) The ICCTA preempts state laws that directly regulaterail operations while preserving state laws of generalapplication with an incidental impact on railtransportation.
19
The ICCTA’s section 10501(b) only preempts state law remedies that
directly conflict with the remedies available under the ICCTA. Accordingly,
courts in several different circuits have construed this section of the ICCTA
narrowly: under the operative test, ICCTA only preempts potentially conflicting
state law remedies that directly regulate rail operations but does not preempt that
state laws that have only an incidental impact on rail operations.
For example, in Florida E. Coast Ry. Co., the Court noted the ICCTA’s
preemptive scope is specifically limited:
The ICCTA pre-emption provision does not preclude the applicationof “all other law.” Cf. 49 U.S.C. § 11341(a) (with regard to mergersand acquisitions, railroad companies exempt from “antitrust laws andfrom all other law, including State and municipal law”). Rather,express pre-emption applies only to state laws “with respect toregulation of rail transportation.” 49 U.S.C. § 10501(b) (emphasisadded). This necessarily means something qualitatively different fromlaws “with respect to rail transportation.”
266 F.3d at 1331. The Florida E. Coast Ry. Court held that, in this manner,
Congress narrowly tailored the ICCTA only to preempt laws that purport to
“manage” or “govern” rail transportation:
In this manner, Congress narrowly tailored the ICCTA pre-emptionprovision to displace only “regulation,” i.e., those state laws that mayreasonably be said to have the effect of “manag[ing]” or“govern[ing]” rail transportation, Black's Law Dictionary 1286 (6thed.1990), while permitting the continued application of laws having amore remote or incidental effect on rail transportation.
20
Id. The Court continued that “[a]llowing localities to enforce their ordinances with
the possible incidental effects such laws may have on railroads would not result in
the feared ‘balkanization’ of the railroad industry as companies sought to comply
with those laws.” Florida E. Coast Ry., 266 F.3d at 1339.
Drawing support from Florida E. Coast Ry., in Franks Inv. Co. LLC v.
Union Pac. R.R. Co., 593 F.3d 404 (5th Cir. 2010), the Fifth Circuit, sitting en
banc, engaged in a detailed analysis of the scope of conflict preemption presented
by the ICCTA. Franks involved whether a landowner’s state law claims regarding
UP’s intention to close some rail crossings were preempted by the ICCTA.
In determining the scope of ICCTA preemption, the Franks Court noted that
section 10501(b)(2) was comprised of two sentences. UP argued “that what
controls is the section’s first sentence, namely, that jurisdiction of the STB over
“transportation by rail carriers” is exclusive.” Franks, 593 F.3d at 408. The Franks
Court disagreed, finding that the second sentence of section 10501(b), which
preempted alternative remedies to those provided by the ICCTA, determined the
scope of ICCTA’s preemption:
We conclude that the relevant part of Section 10501(b) is its secondsentence. The first, and longer one, is defining the authority of theSTB in dealing with the fundamental aspects of railroad regulation,and barring others from interfering with those decisions by making thejurisdiction exclusive.
Franks, 593 F.3d at 410.
21
As noted above, the operative sentence on which the Franks Court focused
read:
Except as otherwise provided in this part, the remedies provided underthis part with respect to regulation of rail transportation are exclusiveand preempt the remedies provided under Federal or State law.
49 U.S.C. § 10501(b)(2). The Franks Court broke this sentence into two parts,
noting that the first part stated it was only the “remedies” which were exclusive:
We break the second sentence down into its component parts. What isdeclared to be exclusive are “the remedies provided under this part,”which we have to some extent already discussed. There areproceedings before the STB that can be held on such matters as rates,rules, practices, and routes. Complaints about such matters can bebrought to the STB. Remedies through administrative action are theexclusive ones.
Franks, 593 F.3d at 410. The Franks Court, drawing support from Fla. E. Coast
Ry. held that under the plain language of the statute, the only “remedies” that were
preempted were “remedies . . . with respect to rail transportation.” After
conducting this analysis, the Franks Court adopted the test for ICCTA preemption
formulated from the Fla. E. Coast case:
Those remedies are exclusive “with respect to regulation,” that lastword being the one fought over in this case and in the precedents. TheEleventh Circuit has held that “Congress narrowly tailored the ICCTApre-emption provision to displace only ‘regulation,’ i.e., those statelaws that may reasonably be said to have the effect of ‘manag[ing]’ or‘govern[ing]’ rail transportation, ... while permitting the continuedapplication of laws having a more remote or incidental effect on railtransportation.”
22
Franks, 593 F.3d at 410 (quoting from Fla. E. Coast, 236 F.3d at 1331). As such,
the en banc Franks Court concluded that ICCTA preemption is limited to state
remedies that constitute regulation of rail transportation. “The text of Section
10501(b), with its emphasis on the word regulation, establishes that only laws that
have the effect of managing or governing rail transportation will be expressly
preempted.” Franks, 593 F.3d at 410.
In other words, Franks held that state laws that directly regulate rail
transportation are preempted, while laws of general application with “a more
remote or incidental effect on rail transportation” are not preempted. The test for
ICCTA preemption formulated by Fla E. Coast and Franks is in wide use; many
state and federal courts agree that the ICCTA only preempts state laws which
purport to directly regulate or interfere with rail transportation, and does not
preempt laws with only an incidental impact on rail transportation. E.g. Island
Park, LLC v. CSX Transp., 559 F.3d 96, 102 (2d Cir. 2009) (“ICCTA preempts all
state laws that may reasonably be said to have the effect of managing or governing
rail transportation, while permitting the continued application of laws having a
more remote or incidental effect on rail transportation.”) (citations omitted);
People v. Burlington Northern Santa Fe R.R., 209 Cal. App.4th 1513, 1527 (2012)
(“The ICCTA preempts all state laws that may reasonably be said to have the
effect of managing or governing rail transportation, while permitting the continued
23
application of laws [of general application] having a more remote or incidental
effect on rail transportation.”); Ass’n of Am. Railroads v. S. Coast Air Quality
circuits, ICCTA preempts all ‘state laws that may reasonably be said to have the
effect of managing or governing rail transportation, while permitting the continued
application of laws having a more remote or incidental effect on rail
transportation.’”); PCS Phosphate Co., Inc. v. Norfolk Southern Corp., 559 F.3d
212, 218 (4th Cir. 2009) (same); Adrian & Blissfield R. Co. v. Vill. of Blissfield,
550 F.3d 533, 539 (6th Cir. 2008) (same); New York Susquehanna and Western Ry.
Corp. v. Jackson, 500 F.3d 238, 252 (3d Cir. 2007) (same); Girard v. Youngstown
Belt Ry. Co., 134 Ohio St. 3d 79, 85, 979 N.E.2d 1273, 1281 (2012) (same).
Under this test, (1) state laws that attempt to directly regulate rail
transportation are preempted, but (2) state laws of general application with only an
“incidental” impact on rail transportation are permitted. The key word in this test
describing what is preempted is the word “incidental.” An “incidental” impact on
rail transportation does not mean a minor impact. Rather, it means that it is
permissible for the state law to regulate rail transportation, so long as regulation of
rail transportation was not the primary or intended purpose of the law:
While “incidental” can mean “minor,” the context in McBurney5
suggests that the Supreme Court used the word to mean something
5 McBurney v. Young, 133 S. Ct. 1709, 1716, 185 L. Ed. 2d 758 (2013).
24
occurring “by chance or without intention or calculation.” Webster'sThird New International Dictionary 1142 (1986). Indeed, the Courthas used the word in this manner in other discrimination cases. See,e.g., Ashcroft v. Iqbal, 556 U.S. 662, 682, 129 S.Ct. 1937, 173L.Ed.2d 868 (2009) (rejecting equal protection challenge for failureplausibly to plead discriminatory intent, observing that it was “nosurprise” that policy “produce[d] a disparate, incidental impact onArab Muslims, even though the purpose of the policy was to targetneither Arabs nor Muslims” (emphasis added)).
Schoenefeld v. Schneiderman, 821 F.3d 273, 280 (2d Cir. 2016).
c) The District Court erred when it rejected the widelyaccepted test for ICCTA preemption, in favor of aminority test.
The District Court’s most significant error is that it rejected this well-
established test in favor of a minority test utilized by the Texas State Court of
Appeals in A & W Properties, Inc. v. Kansas City S. Ry. Co., 200 S.W.3d 342, 346
(Tex. App. 2006), which, in turn, relied principally on the trial court opinion in
CSX Transp., Inc. v. Georgia Pub. Serv. Comm’n, 944 F.Supp. 1573, 1581
(N.D.Ga.1996).
Significantly, the District Court in this case quoted favorably the following
language in the A&W Properties case:
A & W attempts to draw what it calls a preemption “rule” for courts toemploy in making preemption determinations under the ICCTA. A &W’s proposed “rule” would provide:
25
[O]nly those state laws that either directly regulate railoperations or that have a significant economic impact onrailroads [are] preempted, and that the ICCTA does not preemptstate laws enacted under the state's police power that do notdirectly regulate rail operations and that do not have a significanteconomic impact on railroads.
We reject A & W’s attempt to qualify the directive of the ICCTA inthis proposed “rule.” The preemption provision of the ICCTA—in allits breadth—is the rule we must employ.
(App. 338, quoting from A & W Properties, 200 S.W.3d at 350–51). Significantly,
the “rule” that the A&W Properties court—and hence the District Court here—
refused to apply is the precise test adopted by the Fifth Circuit in Franks and the
Eleventh Circuit in Fla. E. Coast, as well as the Second, Third, Fourth, Sixth, and
Ninth Circuits, and state courts in California and Ohio. Plaintiffs submit that the
District Court erred in rejecting the well-established test used by every federal
circuit to consider the issue in favor of a minority test taken from a Texas state
appellate court.
d) Consistent with the established test, Elam points outthe distinction between direct and incidentalregulation of rail transportation.
As noted above, the majority test for ICCTA preemption is narrow,
preempting state laws that directly regulate rail operations while allowing state
laws that have only an incidental impact on rail operations.
Elam v. Kansas City S. Ry. Co., 635 F.3d 796 (5th Cir. 2011), helpfully
illustrates the line between what the ICCTA preempts and what it does not.
26
Consistent with the prevailing test, the Elam court held that a state law that
attempted to directly regulate rail transportation, was preempted. The Elam court
further held that a state law claim brought as a tort of general application with only
an incidental impact on rail transportation was not preempted. Id. at 805.
Elam involved a collision between a train operated by Kansas City Southern
Railway Company (“KCSR”), and an automobile at a rail crossing. The Elam
Plaintiffs alleged two negligence claims; a negligence per se claim for violating the
state’s “antiblocking” statute, and a simple common law negligence claim based on
the railroad’s failure to properly warn that the train was at the crossing. Id. at 801-
802.
A state “antiblocking” statute limits the amount of time that a train can sit at
a rail crossing and block car traffic. Such laws are uniformly held preempted by
the ICCTA, as they purport to directly regulate issues like train length and
switching operations:
Mississippi's antiblocking statute directly attempts to manage KCSR’sswitching operations, including KCSR’s decisions as to train speed,length, and scheduling. The statute thus reaches into the area ofeconomic regulation.
Elam, 635 F.3d at 807 (internal quotations and citations omitted).
However, the Elam Court also held that the simple negligence claim, for
injuries at the rail crossing arising out of the railroad’s alleged failure to warn, did
not directly attempt to regulate rail transportation and, as such, was not preempted
27
by the ICCTA. Initially, the Court noted that the state law of general negligence
was not directed at railroads and its effect in the case was merely incidental to rail
transportation:
A typical negligence claim seeking damages for a typical crossingaccident (such as the Elams’ simple negligence claim) does notdirectly attempt to manage or govern a railroad's decisions in theeconomic realm. Like state property laws and rules of civil procedurethat generally “have nothing to do with railroad crossings,” the effectsof state negligence law on rail operations are merely incidental.
Elam, 635 F.3d at 813. Accordingly, the Elam Court held that the conflict
preemption issue was fact-based, and the railroad had to come forward with
evidence showing the impact on rail operations if the state law were given effect.
“Because the ICCTA does not completely preempt the Elams’ simple negligence
claim, our inquiry is whether Mississippi's negligence law, as applied to the facts
of this case, would have the effect of unreasonably burdening or interfering with
KCSR’s operations.” Elam, 635 F.3d at 813 (citations and attributions omitted).
The Elam Court held that, in conducting this fact-based analysis, the trial court
should start “with the assumption that Congress did not intend to supersede the
historic police powers of the states ‘to protect the health and safety of their
citizens.’” Elam, 635 F.3d at 813 (citing to Medtronic, Inc. v. Lohr, 518 U.S. 470,
475 (1996)).
28
e) Consistent with the established test, most courts haveconstrued ICCTA preemption narrowly, to reach onlystate attempts to directly regulate rail transportation.
Consistent with the Franks and Fla. E. Coast Ry. test, courts in myriad other
cases across various circuits and jurisdictions have held that the ICCTA does not
preempt state laws of general application that have an impact on rail transportation,
where that impact is only remote or incidental. For example, in Emerson v. Kansas
City Southern Ry. Co., 503 F.3d 1126 (10th Cir. 2007), the property owner
plaintiffs brought state tort claims against the railroad, claiming it improperly
disposed of railroad ties on its property which, in turn, had caused flooding on their
property. As here, the railroad claimed that plaintiffs’ claims of property damage
were preempted under the ICCTA.
The Emerson Court disagreed, holding that “transportation” as defined in the
act was limited to the movement of property and passengers:
While certainly expansive, this definition of “transportation” does notencompass everything touching on railroads. Subsection (A) focuseson physical instrumentalities “related to the movement of passengersor property,” and subsection (B) on “services related to thatmovement.”
Emerson, 503 F.3d 1126 at 1129 (quoting from 49 U.S.C. § 10102(9)). The Court
held that this definition of “transportation” was not broad enough to reach claims
that a railroad’s mismanagement of its property caused flooding on adjacent
property:
29
We do not think that the plain language of this statute can be read toinclude the conduct that the Landowners complain of here-discardingold railroad ties into a wastewater drainage ditch adjacent to the tracksand otherwise failing to maintain that ditch. These acts (or failures toact) are not instrumentalities “of any kind related to the movement ofpassengers or property” or “services related to that movement.” Id.Rather, they are possibly tortious acts committed by a landowner whohappens to be a railroad company.
Emerson, 503 F.3d 1126 at 1129-1130 (emphasis added).
In New Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321 (5th Cir.
2008), the Fifth Circuit reached a similar result. In Barrois, the issue was whether
the ICCTA preempted a state law permitting a landowner whose property is
blocked by a rail line to construct a private crossing over the line. The Barrois
Court held that issues regarding rail crossing, although having peripheral
involvement to rail operations, are typically resolved in state court and not
preempted:
Routine crossing disputes are not typically preempted. Crossingdisputes, despite the fact that they touch the tracks in some literalsense, thus do not fall into the category of “categorically preempted”or “facially preempted” state actions.
Barrois, 533 F.3d at 332-333 (emphasis in original)
In Guild v. Kansas City S. Ry. Co., 541 F. App’x 362, 367 (5th Cir. 2013), a
case with some similarity to the present matter, the railroad damaged a privately
owned spur track by parking heavily laden railcars on it. The owner of the track
30
sued in tort, seeking recovery against the railroad for the damage to the track. The
railroad claimed that the state law negligence action was preempted.
The Guild court held that the ICCTA only preempted attempts to regulate
rail transportation, which was not the purpose of this state law tort claim to
recover for damage to property:
As we previously have explained in cases analogous to this one, “onlylaws that have the effect of managing or governing rail transportationwill be expressly preempted.” Here, the Guilds’ claim pertaining totheir damaged spur track sounds in tort. Consequently, the law to beapplied to that claim, absent preemption, is that which Mississippiapplies to negligence actions. The purpose of Mississippi’snegligence law is not to manage or govern rail transportation.Rather, the effects of state negligence law on rail operations aremerely incidental. Accordingly, we conclude that the ICCTA doesnot expressly preempt the Guilds’ negligence claim.
Guild, 541 F. App’x at 367 (citations and attributions omitted, emphasis added).
As Defendants do here, in Guild the railroad argued that holding it liable for
its negligence would impact its future operations, and that “if it were ‘subject to
ordinary state law negligence claims for the weight of its railcars, [it] would be
forced to make adjustments to that weight to avoid liability, as best it could.’” The
court disagreed, noting that in seeking compensation for their injuries “the Guilds
are not attempting in any way to undertake economic regulation of railroads.”
Guild, 541 F. App’x at 368.
Even where a tort action involves actual rail operations, it is not preempted
by the ICCTA where the railroad’s negligent activity involves a one-time event. In
31
Battley v. Great W. Cas. Ins. Co., No. 14-494-JJB, 2015 WL 1258147 (M.D. La.
Jan. 12, 2015), the plaintiffs claimed that the railroad, KCSR, acted negligently by
refusing to move a train blocking a crossing to allow emergency responders access
to the scene of a traffic accident. KCSR, in turn, argued that the negligence claim
was preempted by the ICCTA. The court held the claim was not attempting to
manage rail operations due to the unique nature of the circumstances involved:
However, in the present case, the plaintiffs’ negligence claim is notbased upon a violation of any state law, nor does their claim challengeKCSR’s general operating procedures. The issue here is whether,under the specific circumstances alleged in the Petition andSupplemental Petition, the KCSR defendants’ refusal or failure tomove the train from the crossing was unreasonable, i.e. negligent.Although the KCSR defendants allegedly blocked the roadway, adecision in this action will not create a general policy prohibitingrailroad companies from blocking roadways.
Battley, 2015 WL 1258147 at *4.
Similarly, in Staley v. BNSF Ry. Co., No. CV14-136-BLG-SPW, 2015 WL
860802 (D. Mont. Feb. 27, 2015) the Court held that a negligence claim directly
challenging the manner in which a railroad managed its trains was not preempted.
In Staley a town was divided by two parallel BNSF tracks, a mainline track and a
siding track. There were two crossings over the tracks, one (the West Crossing)
was protected by warning lights and an automatic gate and the other (the East
Crossing) was not. BNSF had developed the practice of leaving trains parked on
the siding track so as to block the protected West Crossing, which had the effect of
32
also blocking visibility at the East Crossing. Town officials had repeatedly
complained about this practice, but BNSF did nothing. Mr. Staley was injured
when, forced to use the East Crossing and his visibility obstructed by a train parked
at the siding, his truck was struck by a train. He sued BNSF for negligence, and
BNSF contended the negligence claim was preempted by the ICCTA.
As in Battley, the Staley Court held that negligent operation of a railroad is
not preempted by the ICCTA:
The Court agrees that as alleged in Staley's Complaint, the situationwas unique and not likely to be frequently replicated. Therefore, bylooking at Staley’s Complaint, his action would not unreasonablyburden BNSF’s operations.
Staley, 2015 WL 860802 at *7.
In Anderson v. Union Pacific R. Co., No. 10-193-DLD, 2011 WL
4352254 (M.D. La. Sept. 16, 2011) the court determined that a state law
negligence claim for personal injury was not preempted by the ICCTA. The court
held that a claim against a railroad for its negligent failure to properly maintain a
railroad bridge crossing was not preempted:
Plaintiffs have pled a simple suit for personal injury damages basedon state law negligence. One of the allegations makes a very generalclaim of failure to maintain and construct the railroad bridge crossing,which was denied by defendant in its answer. There is nothing in thepetition or answer that directly or impliedly has “the effect ofmanaging or governing rail transportation.”
Anderson, 2011 WL 4352254 at * 4
33
And in Franks, the Court addressed whether state property law was
preempted in a dispute between UP and a property owner as to whether he had a
right to an easement over a rail line so as to access his property. The Court held
that the state-law claims had only an incidental effect on rail transportation and
therefore were not preempted:
Resolving the typical disputes regarding rail crossings is not in thenature of regulation governed by the exclusive jurisdiction of theSTB. The relevant question under the ICCTA is whether Franks’srailroad crossing dispute invokes laws that have the effect ofmanaging or governing, and not merely incidentally affecting, railtransportation. It does not. Franks brought a possessory action,claiming that it had a servitude of passage similar to an easement overthe crossings. This suit is governed by Louisiana property laws andrules of civil procedure that have nothing to do with railroadcrossings. Railroads are only affected when the servitude happens tocross a railroad. These property laws are not meant to regulate railroadtransportation, though at times they may have an incidental effect onrailroad transportation.
Franks, 593 F.3d at 411.
Similarly, in Adrian & Blissfield R. Co. v. Vill. of Blissfield, 550 F.3d 533,
541 (6th Cir. 2008) the Court held that a state law that required railroads to pay for
pedestrian crossings spanning the tracks was not preempted by the ICCTA. Even
though the state law in Adrian & Blissfield was specifically directed at railroads,
the Court held that it was not preempted because it involved traditional state law
concerns about public safety and created no obligations different from those
imposed on state laws generally on non-railroad entities:
34
The fact that Mich. Comp. Laws § 462.309 applies specifically torailroads does not make it discriminatory. This is not an instance inwhich the state has chosen to require something of the Railroad that itdoes not require of similarly situated entities. The concerns thatanimated the Village's sidewalk construction apply only to theRailroad because the railroad bisects the town and pedestrianwalkways are needed for public safety.
Adrian & Blissfield, 550 F.3d at 541-42.
Numerous other courts have reached similar results, holding that state law
claims that do not attempt to directly regulate rail operations are not preempted by
the ICCTA. For example, in Works v. Landstar Ranger, Inc., No. CV 10-1383
DSF (OPx), 2011 WL 9206170 (C.D. Cal. 2011), the court held that the ICCTA
did not preempt a plaintiff’s state law claims alleging that its goods had been
damaged during rail transport. “Plaintiff's negligence and fraud claims merely
seek to enforce a normal duty of care and a duty not to defraud one’s customers.
This has nothing to do with the service offerings-i.e., its schedules, origins, or
destinations-by Landstar or the carriers with which it contracts.” E.g. Girard v.
Youngstown Belt Ry. Co., 134 Ohio St. 3d 79, 90, 979 N.E.2d 1273, 1286 (2012)
(“The city's eminent-domain action would therefore not be preempted by the
ICCTA under the as-applied analysis.”); Wolf v. Cent. Oregon & Pac. R.R., 230
(“However, the New York State court exercised jurisdiction over Defendants'
claims of Plaintiff's unlawful interference with their easement, not a claim
regarding “the construction, acquisition, operation, abandonment or
discontinuance” of any type of “tracks[ ] or facilities” under the ICCTA.”).
The claims asserted by Plaintiffs are of the same nature as those upheld in
Emerson, Barrois, Guild, Franks, and the other cases cited above. Plaintiffs’
claims are based on laws of general application, which have only an incidental
impact on railroad operations. Plaintiffs do not seek to instruct Defendants as to
how to operate their transportation businesses on a day-to-day basis; they are
merely seeking to hold Defendants liable for their negligent conduct which caused
damage to Plaintiffs in this particular instance. As such, Plaintiffs’ claims are not
preempted by the ICCTA, because they do not attempt to regulate rail
transportation at all, much less “directly regulate” it. Plaintiffs’ claims are based
on laws of general application with only minimal and incidental impact on rail
transportation and, as such, are not preempted by the ICCTA.
3. Analysis of other preemption statutes shows thatcongressional imposition of a uniform regulatory schemedoes not—without more—extinguish garden-variety tortclaims against the regulated entity.
36
Absent express congressional intent to the contrary, federal laws and
regulatory schemes do not extinguish garden-variety state law tort claims. The
Supreme Court held that tort claims that may have an incidental effect on a
company’s federally-regulated labelling practices are not preempted in Bates v.
Dow Agrosciences LLC, 544 U.S. 431, 442 (2005). In Bates, a group of farmers
sued a pesticide manufacturer, claiming that a product was negligently and
misleadingly labelled under state law. The manufacturer responded that federal
law governed labeling of pesticides, at 7 U.S.C. § 136v, preempted states from
imposing other requirements. According to § 136v, “Such State shall not impose
or continue in effect any requirements for labeling or packaging in addition to or
different from those required under this subchapter.”
The Supreme Court held that, just because the state law claims might have
the impact of causing the manufacturer to change its label, this does not mean that
the state law “required” such a change:
An occurrence that merely motivates an optional decision does notqualify as a requirement. The Court of Appeals was therefore quitewrong when it assumed that any event, such as a jury verdict, thatmight “induce” a pesticide manufacturer to change its label should beviewed as a requirement.
Bates, 544 U.S. at 443. In other words, while states were prohibited from
regulating pesticide labels, a tort claim that a label was misleading did not
constitute regulation, even though it might have result in a manufacturer seeking to
37
change its label. Sleath v. W. Mont Home Health Servs., Inc., 16 P.3d 1042, 1051
(Mont. 2000) (“While a damage award may prompt a pesticide manufacturer to
seek the EPA’s approval for a change in labeling, it does not directly command
such a change.”).
Similarly, in the Airline Deregulation Act (49 U.S.C. § 1301 et seq.)
(“ADA”), Congress preempted any state law “relating to rates, routes or services of
any air carrier having authority under Title IV of this Act to provide air
transportation.” 49 U.S.C. App. § 1305(a)(1). In Hodges v. Delta Airlines, Inc.,
44 F.3d 334, 335 (5th Cir. 1995), the Fifth Circuit, sitting en banc, decided that this
did not preempt a tort claim for someone injured while flying on a commercial
aircraft. The Hodge Court held that federal preemption of state regulation of
airlines did not displace garden variety tort claims, even when they were incurred
while the air carrier was providing “services.” “Thus, federal preemption of state
laws, even certain common law actions ‘related to services’ of an air carrier, does
not displace state tort actions for personal physical injuries or property damage
caused by the operation and maintenance of aircraft.” Hodges, 44 F.3d at 336.
The above preemption analysis is also true with respect to federal regulation
of nuclear energy. Federal law generally preempts state regulation of that industry,
but, again, tort liability and other state law claims of general applicability that may
have an incidental effect on the regulated industry are not preempted. In Silkwood
38
v. Kerr-McGee Corp., 464 U.S. 238, 256 (1984), the Court held “that in enacting
and amending the Price-Anderson Act, Congress assumed that state-law remedies,
in whatever form they might take, were available to those injured by nuclear
incidents.” The Silkwood Court noted that Congress showed a willingness to
accept a tension between uniform federal regulation of nuclear safety issues with
continued application of state tort law:
No doubt there is tension between the conclusion that safetyregulation is the exclusive concern of the federal law and theconclusion that a State may nevertheless award damages based on itsown law of liability. But as we understand what was done over theyears in the legislation concerning nuclear energy, Congress intendedto stand by both concepts and to tolerate whatever tension there wasbetween them.
Silkwood, 464 U.S. at 256. Plaintiffs here submit that there is nothing that suggests
that a different rule should apply with respect to federally-regulated railroads, and
certainly there is nothing in either the statutory language or the legislative history
of the ICCTA that suggests that Congress intended to extinguish all state law tort
liability as it applied to railroads.
4. While it is possible for Congress to eliminate all state tortremedies against an industry without creating a substituteremedy, this is extremely rare and the ICCTA was notintended to accomplish this.
a) The language and Legislative History of the ICCTAshows Congress intended the scope of its preemptionto be narrow and focused on state economicregulation of rail transportation.
39
“The purpose of Congress is the ultimate touchstone in every pre-emption
case. As a result, any understanding of the scope of a pre-emption statute must rest
primarily on a fair understanding of congressional purpose.” Medtronic, Inc. v.
Lohr, 518 U.S. 470, 485-86 (1996) (attribution omitted). While Congressional
intent is primarily discerned “from the language of the pre-emption statute and the
statutory framework surrounding it,” the “structure and purpose of the statute as a
whole” is “also relevant.” Medtronic, 518 U.S. at 486 (citations and attribution
omitted).
Here, the Congressional purpose in passing the ICCTA was primarily to
abolish the ICC and to deregulate Railway Companies. The bill makes its purpose
clear in its preamble:
An Act – To abolish the Interstate Commerce Commission, to amendsubtitle IV of title 49, United States Code,6 to reform economicregulation of transportation, and for other purposes.
(App. 229). The ICCTA was primarily passed to end the practice of government
rate-setting by the ICC. Significantly, this says nothing about totally immunizing
railroads from tort liability in all 50 states. It hardly seems likely that Congress
intended that such a profound change in the law would reasonably fit within the
“other purposes” set out in the statute’s statement of purpose.
6 A section titled “Miscellaneous Provisions” and addressing such matters as“commercial space launch activities,” “fiber drum packaging,” and a “domestictrade study.” (App. 230).
40
The Vermont Supreme Court examined the ICCTA and its legislative
history, and concluded that the congressional intent in enacting the bill was—
besides abolishing the ICC—to deregulate the rail industry and establish the STB
with jurisdiction over some aspects of interstate rail activity:
In 1995, Congress enacted the ICCTA, which abolished the InterstateCommerce Commission, established the Surface Transportation Board(STB) and granted the STB jurisdiction over certain aspects ofinterstate rail activity. Its purpose was to deregulate the economicactivity of surface transportation industries.
In re Vermont Ry., 171 Vt. 496, 498 (2000) (internal citations omitted). The
Vermont Ry. Court explained that the bill’s legislative history shows that Congress
intended that the states retain their historic police powers:
Nevertheless, it retained the traditional police powers reserved to thestates by the Constitution. H.R.Rep. No. 104–311, at 95–96, reprintedin 1995 U.S.C.C.A.N. at 807–08 (noting with respect to jurisdictionalprovision of bill that explicit disclaimer regarding states retainingtheir residual police powers was unnecessary; although Congressintended to preempt all state regulation of economic activity,including state securities regulation, the states nevertheless “retain thepolice powers reserved by the Constitution” under the bill).
Vermont Ry., 171 Vt. at 498-99.
In Fla. E. Coast Ry. the Court came to a similar conclusion, namely, that the
ICCTA intended to untangle the ICC’s regulatory control over railroads and rate-
setting, and, outside of that sphere, was intended to have no impact on state laws of
general applicability. The Court quoted from the House Conference Report which
noted that, while the remedies provided by the ICCTA were intended to be
41
exclusive, state laws of general application “‘remain fully applicable unless
specifically displaced, because they do not generally collide with the scheme of
economic regulation (and deregulation) of rail transportation.’” Florida E. Coast
Ry., 266 F.3d at 1339 (quoting from H.R. Conf. Rep. 104–422 (1995), at 167,
reprinted in 1995 U.S.C.C.A.N. 850, 852 (emphases in Florida E. Coast). A
commentator’s review of the ICCTA’s legislative history reached a similar result;
that the Act focused on economic deregulation with no intent to deprive the states
of their historic police powers:
A detailed analysis of the legislative history if the ICCTA reveals thatCongress had no intention of allowing the ICCTA to foreclose theapplication of local police powers. As noted in Part II, the maincongressional intent behind the ICCTA was to free the railroadindustry from economic impediments . . . The [House report] nevermentioned a need for eliminating state and local zoning orenvironmental protection, nor did it find that local laws impeded arailroad’s economic success.
Eldredge, M., Who’s Driving the Train? Railroad Regulation and Local Control,
75 U. Colo. L. Rev. 549, 587 (2004). See also Girard v. Youngstown Belt Ry. Co.,
134 Ohio St. 3d 79, 85, 979 N.E.2d 1273, 1281 (2012) (“the ICCTA’s legislative
history indicates that Congress did not intend to preempt any and all state laws that
might touch upon or indirectly affect railway property.”).
In 1997, two years after it enacted the ICCTA, Congress enacted another bill
which limited a portion of the rail industry’s tort liability—further evidencing that
Congress did not intend the ICCTA to absolve the railroad industry from liability
42
for its torts. Congress passed 49 U.S.C. § 28103, which limited a railroad’s
liability “in a claim for personal injury to a passenger, death of a passenger, or
damage to property of a passenger arising from on in connection with the provision
of rail passenger transportation . . .” 49 U.S.C. § 28103 (a)(1). This statute limited
the railroad’s liability for punitive damages when the passenger could show the
railroad acted “with a conscious, flagrant indifference to the rights or safety of
others,” 49 U.S.C. § 28103 (a)(1) and limited passenger liability “arising from a
single accident” to $200,000,000. 49 U.S.C. § 28103 (a)(2). If Congress had
absolved Defendants from all tort liability related to their rail operations in 1995, it
would have been wholly unnecessary for it to pass restrictions on tort liability for
passengers injured in rail transportation in 1997.
b) While it is theoretically possible for Congress toextinguish state tort remedies without providing afederal remedy, no intent to do so is shown here.
The remarkable nature of the District Court’s Order must be stressed here: in
dismissing Plaintiffs’ claims without leave to amend, the Court necessarily found
that there were no possible facts Plaintiffs could allege that would permit their
damage claims to escape ICCTA preemption. Yet, as the Eighth Circuit
acknowledged in Griffioen, federal law supplies no remedies for the Plaintiffs.
Griffioen, 785 F.3d at 1191. As such the District Court, presuming as it must the
truth of the allegations contained in the CAP that Defendants’ negligent conduct
43
caused immense property damage to nearly 20,000 people, found that Congress
intended to extinguish any possible state law remedy for those people while
providing no federal remedy in its place. Plaintiffs submit that the District Court
should have declined to reach this result, given the absence of any showing that,
when it passed the ICCTA, Congress intended to immunize railroads from tort
liability in all fifty states.
In fact, the federal courts have repeatedly held that imposition of a federal
regulatory scheme does not extinguish state tort law remedies against the regulated
entities, at least in the absence of an express congressional intent to do so. This
was, for example, the holding of the Silkwood Court, which held that the extensive
federal regulation of the nuclear industry did not extinguish state tort law claims:
Indeed, there is no indication that Congress even seriously consideredprecluding the use of such remedies either when it enacted the AtomicEnergy Act in 1954 and or when it amended it in 1959. This silencetakes on added significance in light of Congress’ failure to provideany federal remedy for persons injured by such conduct. It is difficultto believe that Congress would, without comment, remove all meansof judicial recourse for those injured by illegal conduct.
Silkwood, 464 U.S. at 251. The courts reached similar conclusions about the
Airline Deregulation Act (ADA), for similar reasons:
Significantly, too, neither the ADA nor its legislative history indicatesthat Congress intended to displace the application of state tort law topersonal physical injury inflicted by aircraft operations, or thatCongress even considered such preemption. This silence takes onadded significance in light of Congress’s failure to provide any federalremedy for persons injured by such conduct. It is difficult to believe
44
that Congress would, without comment, remove all means of judicialrecourse for those injured by illegal conduct.
Hodges, 44 F.3d at 338 (footnotes, citation and attribution omitted).
The Court can take judicial notice of the fact that on occasion railroads
damage property and injury or kill persons through their own negligence. For
example, last year an Amtrak commuter train derailed, killing 8 persons and
injuring more than 200. Preliminary reports indicate that the cause of the crash
was that the train was travelling at an unsafe speed through a curved portion of the
track. (App. 232-239).
Presuming that the crash was due to the railroad’s negligence, the District
Court’s apparent position is that the persons injured and the families of the persons
killed have no remedy at all against the railroad. The train was clearly engaged in
rail “operations” at the time of the crash, and imposing liability on Amtrak would
clearly involve after-the-fact regulations of the speeds at which Amtrak can operate
its trains. This would be an absurd result, and the Plaintiffs submit that depriving
these persons of a remedy was not what Congress believed it was doing when it
enacted the ICCTA.
C. The Plaintiffs’ claims involve rail safety rather than economic issues,and as such preemption should be examined under the FRSA ratherthan the ICCTA.
1. The standard of review is for correction of error, and theissue was preserved for appeal.
45
Given that Property Owners appeal the District Court’s grant of Defendants’
Motion to Dismiss on the pleadings, review is for correction of error. Smith v.
Smith, 513 N.W.2d 728, 730 (Iowa 1994).
The issue of the impact of the FRSA rather than the ICCTA on the
Plaintiffs’ claims was raised at the District Court and therefore was preserved for
appeal. (E.g. App. 78-79).
46
2. Under the FRSA, state law claims addressing railroadsafety issues are not preempted.
The Federal Railroad Safety Act (“FRSA”) is a comprehensive federal
scheme governing the safety of railroad operations. 49 U.S.C. § 20101. While the
ICCTA preempts state laws that intrude within its sphere—i.e., state laws that
purport to directly economically regulate railroads—the FRSA has an express
provision stating that state laws that govern rail safety are not preempted.
Specifically, the FRSA provides that “[n]othing in this section shall be construed to
preempt an action under State law seeking damages for personal injury, death, or
property damage” on the grounds that a party “failed to comply with a State law . .
.” 49 U.S.C. § 20106(b). On its face this statute clearly applies, as the Plaintiffs
are bringing an “action under State law seeking damages for . . . property damage”
alleging Defendants “failed to comply with a State law.” As such, under the FRSA
the Plaintiffs’ state law claims for relief are affirmatively not preempted.
3. Claims involving rail safety, like the Plaintiffs’, aregoverned by the FRSA rather than the ICCTA.
The line between what claims are preempted by the ICCTA and what claims
are expressly not preempted by the FRSA was explored in Tyrrell v. Norfolk
Southern Ry. Co., 248 F.3d 517 (6th Cir. 2001). Tyrrell involved a claim by a
railroad worker injured due to the railroad’s violation of a state law mandating
certain clearances between tracks. Tyrrell, 248 F.3d at 520. Because this state law
47
mandated certain requirements for track location, it could arguably constitute direct
regulation of rail transportation, and be subject to preemption by the ICCTA under
the Franks test discussed above.
In Tyrrell, the district court had ruled that the ICCTA preempted plaintiff’s
claim. The Sixth Circuit reversed, holding that in giving such broad scope to the
ICCTA the district court effectively repealed the FRSA’s savings clause:
Rather, the district court’s decision erroneously preempts state railsafety law that is saved under FRSA if it tangentially touches upon aneconomic area regulated under the ICCTA. As a result, thisinterpretation of the ICCTA implicitly repeals FRSA’s first savingclause.
Tyrrell, 248 F.3d at 522-523.
The Tyrrell Court resolved the issue by narrowing the scope of ICCTA
preemption, interpreting it “in pari materia”7 with the FRSA. Tyrrell held that, so
modified, the ICCTA’s scope involved “encouraging safe and suitable working
conditions in the railroad industry,” and “economic regulation and environmental
impact assessment.” Tyrrell, 248 F.3d at 523. The FRSA, on the other hand,
governed issues involving rail safety, and so governed whether a state law
requiring certain rail clearances was preempted.
7 In other words, given that there were two statutes which purported to coverrailroad operations, they had to be construed in light of each other.
48
This position was adopted by the Eighth Circuit in Washington County,
when it determined that Iowa Code section 327F.2, which requires railroad
companies to keep railroad bridges in good repair, was not preempted by the
ICCTA:
Adopting the position urged by the United States and the STB asamici, the court held that ICCTA and the FRSA must be construed inpari materia; that the Federal Railroad Administration under theFRSA exercises primary authority over rail safety; and therefore [] theFRSA, not ICCTA, determines whether a state law relating to railsafety is preempted.
Washington County, 384 F.3d at 560.
Numerous cases agree that state law claims alleging that railroads caused
property damage or personal injury are subject to a review for preemption in light
of the FRSA and its saving clause, accordingly are not preempted by the ICCTA.
For example, in Sigman v. CSX Corp, No. 15-13328, 2016 WL 2622007 (S.D.W.
Va. 2016) a rail tanker derailment caused “release and migration of toxic
substances into the area waterways.” Sigman, 2016 WL 2622007, at *3. The
Court held that the scope of preemption was governed by the FRSA, rather than the
ICCTA. “Plaintiffs’ claims all relate to rail safety, while the preemption scope of
the ICCTA envelops the economic regulations of railroads.” Id. at *6. As such,
the Sigman Court held that the plaintiffs’ state law tort claims were not preempted.
Similarly, in Smith v. CSX Transp., No. 13 CV 2649, 2014 WL 3732622
(N.D. Ohio 2014), a class of plaintiffs alleged that a derailment caused a chemical
49
spill and, as a result, “approximately 400 homes and ‘hundreds to thousands of
residents within a half-mile to mile radius’ of the spill were forced to evacuate.”
Id. at *1. The Smith Court held that plaintiffs’ claims, which involved allegations
that the railroad’s failure to conduct proper safety inspections of the tracks,
involved safety issues rather than economic regulation, and were governed by the
FRSA rather than the ICCTA. “Because those claims relate to rail safety, and do
not amount to the economic regulation of railroads, the ICCTA does not preempt
Plaintiffs’ claims.” Id. at *2.
Plaintiffs submit that their tort law claims for recovery of property damage
against Defendants involve rail safety subject to the FRSA and are not impressible
economic regulation subject to the ICCTA. Plaintiffs do not seek to change the
rates that railroads charge, the routes that they maintain, or any other aspect of the
railroads’ operation. Instead, Plaintiffs seek compensation for losses due to
Defendants’ safety-related, negligent conduct. Accordingly, the injuries at the
heart of Plaintiffs’ claims are more like the chemical spills in Smith and Sigman
than they are like the rates, routes, and services regulated by the ICC and then de-
regulated by the ICCTA. At any rate, it was clearly erroneous for the District
Court to decide this matter on the pleadings, without the benefit of an evidentiary
record.
50
D. The District Court erred by dismissing the Plaintiff Class’ claimson the pleadings, without a factual showing by Defendants thatthe state laws at issue actually burdened rail transportation.
1. The standard of review is for correction of error, and theissue was preserved for appeal.
Given that Plaintiffs appeal the District Court’s grant of Defendants’ Motion
to Dismiss on the pleadings, review is for correction of error. Smith v. Smith, 513
N.W.2d 728, 730 (Iowa 1994).
The issue of the propriety of the District Court dismissing the Plaintiffs’
claims on the pleadings was raised at the District Court and therefore was
preserved for appeal. (E.g. App. 84-86).
2. The District Court erred in Finding Plaintiffs’ claimsburdened rail transportation, in the absence of factsestablishing such a burden.
There may be cases where preemption of state law claims by the ICCTA is
obvious from the face of the pleadings. For example, state law claims that a
railroad’s rates were too high or demanding that it relocate one of its rail lines
would be preempted on their face. However—in this case, like in most cases—the
extent to which a state claim intrudes on rail operations is a fact based-issue, which
cannot be decided on the pleadings.
In Elam, the Fifth Circuit held that whether their common law negligence
claim based on the railroad’s failure to properly warn that the train was at the
crossing required a factual analysis to determine whether it was preempted:
51
Because the ICCTA does not completely preempt the Elams’ simplenegligence claim, our inquiry is whether Mississippi’s negligence law,as applied to the facts of this case, would have the effect ofunreasonably burdening or interfering with KCSR’s operations. Ourinquiry is fact-based, and KCSR must come forward with evidence ofthe specific burdens imposed. General evidence that rail crossingsaffect rail transportation is insufficient.
Elam, 635 F.3d at 813 (citations and attributions omitted). See also Fayard v. Ne.
state or local regulation is being applied so as to not restrict unduly the railroad
from conducting its operations, or unreasonably burden interstate commerce, is a
fact-specific determination.”).
The fact-specific nature of most ICCTA preemption issues was also noted in
People v. Burlington N. Santa Fe R.R., 209 Cal. App. 4th 1513, 1528, 148 Cal.
Rptr. 3d 243, 254 (2012). There the Court noted that “[f]or state or local actions
that are not facially preempted, the ICCTA preemption analysis requires a factual
assessment of whether that action would have the effect of preventing or
unreasonably interfering with railroad transportation.” (citations and attributions
omitted).
Similarly, in the Franks case the Court determined that whether the railroad
crossings sought by the plaintiff would significantly burden rail operations was
necessarily factual in nature:
We conclude that the district court decided only that all railroadcrossings affect rail transportation. Certainly at one level that is true.
52
We have held, though, that more is required before preemptionapplies.
Franks, 593 F.3d at 415. The Franks Court rejected “Union Pacific’s argument
that general testimony regarding railroad crossings satisfies the burden of proving
preemption under the as-applied test” holding that what was required was evidence
that the specific crossings at issue would substantially impact rail operations:
By definition, an as-applied challenge would need to address specificcrossings. Otherwise, a finding of as-applied preemption in this casewould be nothing more than a finding that private crossing disputesare always preempted, at least in low-lying areas. We have rejectedthat view of ICCTA preemption.
Franks, 593 F.3d at 415.
Respectfully, Plaintiffs submit that the District Court’s conclusory and
proclamation that the Plaintiffs are “complaining about actions taken by the
railroad Defendants that are an essential part of Railway Companies’ operations”
(App. 342) is not sufficient evidentiary support for Defendants’ contention that
Plaintiffs’ claims place a significant burden on railroad transportation.
E. The District Court erred in holding that Iowa law requiring railbridges to be kept in good repair was preempted by the ICCTA.
1. The standard of review is for correction of error, and theissue was preserved for appeal.
Given that Property Owners appeal the District Court’s grant of Defendants’
Motion to Dismiss on the pleadings, review is for correction of error. Smith v.
Smith, 513 N.W.2d 728, 730 (Iowa 1994).
53
The issue of the whether Iowa Code section 372F.2 was preempted was
raised at the District Court and therefore was preserved for appeal. (E.g. App. 65-
67).
2. In Washington County the Eighth Circuit held that the verystatute under which Plaintiffs are proceeding, requiringrailroads to keep rail bridges in good repair, was notpreempted by the ICCTA.
As noted above, in Washington County the Eighth Circuit looked to the
FRSA to hold that a state law which directly regulated the manner in which
railroads maintained their rail bridges was not preempted by the ICCTA. This case
has particular significance because one of the state statutes under which Plaintiffs
are proceeding here was the same one that the Washington County Court held was
saved from preemption.
Specifically, some of the Plaintiffs’ claims are based on Iowa Code section
372F.2, a law which requires railroads to “maintain, and keep in good repair all
bridges . . . necessary to enable it to cross over or under any canal, watercourse,
other railway, public highway, or other way . . .” The statute further provides that
railroads violating their responsibilities under this statute “shall be liable for all
damages sustained” by reason of that violation. Iowa Code § 327F.2.
The District Court found that Plaintiffs’ claims under this Iowa statute were
preempted by the ICCTA. Plaintiffs submit that this is error. In fact, in Chicago &
Eastern R.R. Corp. v. Washington County, Iowa, 384 F.3d 557 (8th Cir. 2004) the
54
Eighth Circuit specifically held that Iowa Code section 327F.2 was not preempted
by the ICCTA.
In Washington County the County sought to have a railroad (“IC&E”)
replace four aging bridges. Two of the bridges were railroad bridges over
highways, and two were bridges for road traffic that spanned IC&E rail lines.
IC&E declined to pay for the new bridges so “the County petitioned the Iowa
Department of Transportation (‘IDOT’) for a ruling that IC&E must pay for
replacement bridges to comply with Iowa Code § 327F.2.” Washington County,
384 F.3d at 558.
Before that ruling could be issued, IC&E filed a federal lawsuit raising the
precise issue here, whether Iowa Code section 327F.2 was preempted by the
ICCTA:
Before that hearing was completed, the parties obtained a stay, and IC& E commenced this action against the County and the Director ofIDOT, seeking a declaratory judgment that § 327F.2 is preempted bythe Interstate Commerce Commission Termination Act of 1995(“ICCTA”).
Washington County, 384 F.3d at 558.
However, in deciding that section 327F.2 was not preempted, the Eighth
Circuit noted that it was not written in a vacuum. Drawing support from the Sixth
Circuit’s Terrell decision, the Washington County Court noted that Congress had
created two sets of statutes governing rail transportation; the ICCTA which
55
addressed economic regulation of railroads and the FRSA, which dealt with rail
safety. As noted above, the FRSA expressly states that state laws addressing rail
safety are not preempted. The Washington County agreed with Terrell that the
scope of ICCTA preemption had to be examined in light of the FRSA, and the two
statutes had to be “construed in pari materia. Washington County, 384 F.3d at
560.
The Washington County Court then held that, in issues dealing with rail
safety, the more limited preemption provisions of the FRSA governed, rather than
the ICCTA. “[T]he Federal Railroad Administration under the FRSA exercises
primary authority over rail safety; and therefore that the FRSA, not ICCTA,
determines whether a state law relating to rail safety is preempted.” Washington
County, 384 F.3d at 560. And, while IC&E argued that the reason the County
wanted the bridges replaced was “for reasons of ‘highway improvement,’ not rail
safety,” the Washington County Court held this argument was “unpersuasive”
because replacing the bridges was clearly motivated by safety concerns. Id.
The Washington County Court had a second reason for finding the statute
was not preempted, which was the interplay between federal and state
transportation laws. Pointing to statutes that existed at the time of the ICCTA’s
passage, the Court noted that “Congress for many decades has forged a
federal-state regulatory partnership to deal with problems of rail and highway
56
safety and highway improvement in general . . . .” Washington County, 384 F.3d
at 561. The Eighth Circuit held that given this, and given the ICCTA’s silence on
the issue of railroad safety, there was no indication that Congress intended the
ICCTA to completely occupy the field of railroad bridge regulation:
ICCTA did not address these problems. Its silence cannot reflect therequisite clear and manifest purpose of Congress to preempttraditional state regulation of public roads and bridges that Congresshas encouraged in numerous other statutes.
Washington County, 384 F.3d at 561 (attribution omitted).8
In determining that § 327.F2 was preempted in spite of Washington County,
the District Court concluded as follows:
As to Plaintiffs’ reliance on the Washington County case, the Courtfinds Washington County is distinguishable because it involvedbridges that intersected with highways, which is a highway safetyissue that incorporates state regulations. In the case at bar, the bridgesserve railroad purposes only and do not support a highway crossingfor motor vehicles.
(App. 342). This ruling ignores a central holding of Washington County, which is
that proper construction of bridges is a rail safety issue and, as such, preemption is
governed by the FRSA rather than the ICCTA. 384 F.3d at 560.
8 If Washington County had the police power to make sure rail bridges did notharm citizens driving on highways traveling under and over crumbling rail bridges,then certainly the state has the police power pursuant to section 327F.2 to holdrailroads liable for property damage due to flooding caused by Defendants’ failurekeep their rail bridges in good repair.
57
VI. CONCLUSION.
Plaintiffs’ CAP has been on file for over three years and, for this entire
period, Defendants have repeatedly used questionable procedural mechanisms to
avoid discovery or determination of the merits. Defendants argued, first, that
Plaintiffs’ claims are preempted by the FRSA, then that they were completely
preempted by the ICCTA, and now, when both of their previous arguments failed,
that the claims are subject to ICCTA conflict preemption. Plaintiffs submit that
Defendants continue to get it wrong, and respectfully ask this Court to overturn the
decision of the District Court and remand this case for a trial on the merits.
VII. REQUEST FOR ORAL ARGUMENT
Appellants respectfully request to be heard in oral argument.
CERTIFICATE OF COMPLIANCE.
I certify that pursuant to Circuit Rule 32(a)(7)(C)(i) this brief is reproduced
using Times New Roman 14 point type, a proportionately spaced typeface. The
lines are double-spaced and the word count is approximately 13,881 words.
